Use the tables for the question(s) below.
Estimated 2005 Income Statement and Balance Sheet Data for Ideko Corporation
The following are financial ratios for three comparable companies:

-Based upon the average EV/Sales ratio of the comparable firms,if Ideko holds $6.5 million of cash in excess of its working capital needs,then Ideko's target market value of equity is closest to:
A) $165 million
B) $157 million
C) $193 million
D) $191 million
E) $155 million

Question

Use the tables for the question(s) below.
Estimated 2005 Income Statement and Balance Sheet Data for Ideko Corporation
  The following are financial ratios for three comparable companies:
 
-Based upon the average EV/Sales ratio of the comparable firms,if Ideko holds $6.5 million of cash in excess of its working capital needs,then Ideko's target market value of equity is closest to:
A) $165 million 
B) $157 million 
C) $193 million 
D) $191 million 
E) $155 million

Quizplus · Accepted Answer

B) Average EV / Sales = 11ea7e5a_6eec_7d0c_9a0a_fb977cbec603_TB1623_11 = 2.07
EV = EV / Sales + Sales = 2.07 × $75 million = $155.25
EV = Equity + Debt - Cash in excess of NWC needs
Equity = EV - Debt + Cash in excess of NWC needs = $155.25 - $4.5 + $6.5 = $157.25 million

Use the Tables for the Question(s) Below